November 2026 Payroll News

The Office of Management and Budget (OMB) has approved a revised Income Withholding for Support (IWO) Form with a new expiration date of Aug. 31, 2029. Since states and tribes have one year to implement the revised IWO, OMB has extended the expiration date of the prior version from Aug. 31, 2026, to Aug. 31, 2027. Agencies must continue to honor the IWO form. The expiration date on the form does not affect the validity of the IWO issued. Once an IWO is served to an employer, it remains in effect until it is officially terminated by the issuing agency.

On-demand payrolls are processed based on the On Demand Payroll Processing Standard. The standardization of the on-demand payment process allows OMES to better manage its workload as well as set reasonable expectations with agency partners. As always, we encourage agencies to allow the retro process to pull in any prior period transactions to pay on the next payroll. On-demand payrolls should not be processed while the main payroll is in process because it causes issues with recalculations and reconciliations for both the agency and OMES.

OMES will process on-demand payrolls on Mondays and Wednesdays each week unless the Monday/Wednesday schedule conflicts with a holiday or a published monthly, supplemental monthly or biweekly payroll processing day. If there is a conflict, the on-demand payroll(s) will be processed the following business day. If there is a need for a payment outside of this published schedule, an agency may appeal to the OMES Director of Payroll for an exception. An on-demand processing exception request form will then need to be completed by the agency, signed by the agency director or chief financial officer and submitted to OMES.

Agencies should be running RPT00333 to identify employees with incomplete I-9 processing. Once identified, steps should be taken to ensure the I-9/E-Verify process is timely completed. If any issues or errors are encountered with the E-Verify process, including a Tentative Nonconfirmation (mismatch), please submit a service ticket for assistance.

As a reminder, the I-9/E-Verify process is used to verify the identity and employment authorization of individuals hired for employment in the United States. In accordance with federal law, the employee must complete Section 1, Employee Information and Attestation no later than the first day of employment. Section 2, Employer Review and Verification must be completed within three business days after the employee’s first day of employment. The E-Verify process must begin no later than the third business day after the employee starts work for pay. For example, if the employee begins work for pay on Monday, the information must be entered in Workday@OK and the E-Verify case created by Thursday of that week. Failure to comply could result in penalty assessment to the state as the employer.

Agencies are encouraged to promote electronic-only access to year-end forms. The following information is provided to distribute to employees:

To avoid waiting for your 2026 W-2 to arrive by mail, you can opt to go paperless only. When you choose to go paperless only, you will receive an electronic copy of the document that can be downloaded and printed earlier than if you elect both paper and electronic. Once you select to receive an electronic-only copy, you do not need to make the selection again in the future. To make a change in Workday@OK, go from the main menu to Personal > Benefits and Pay > Pay > Tax. Under Tax Forms Printing Elections, select Edit and choose: Receive electronic copy of my Year End Tax Documents. Select OK to save the change.

Agencies are reminded to double-check any executive-level or unusual requests for lists of Forms W-2 or Social Security numbers. Cybercriminals continue to trick payroll and human resource officials by disguising emails to make them appear as if they are from an organization executive. An email is sent to an employee in the payroll or human resources department, requesting a list of all employees and their Forms W-2. The thieves then attempt to file fraudulent tax returns for tax refunds and/or post the information for sale on the Darknet. Personnel should pay close attention to the email address of the sender and confirm requests for any sensitive data verbally, either in person using previously known telephone numbers.

As part of the 2017 Security Summit effort, the “Don’t Take the Bait” education series posted on the IRS website focused on raising awareness of the critical need for increased computer security and caution when reviewing email inboxes – specifically email scams that identify the sender as a friend, customer or legitimate company. In addition, the Security Summit continues to meet annually for National Tax Security Awareness Week to address areas of need and help raise public awareness.

The IRS continues to investigate phishing emails. If an agency employee receives an email of this type, immediately contact Lisa Raihl at 405-521-3258 or Jean Hayes at 405-522-6300.

Agencies with employees working outside Oklahoma should be aware that other states may have implemented a Paid Family Medical Leave plan or other state plan as required by their laws. Such a plan may involve the withholding of amounts in the form of an employee withholding, an employer withholding or a combination of both. If such amounts are included in the payroll results, do not adjust or refund the withholdings. We are required to withhold, remit and report in accordance with state laws. Agencies need to understand the withholding and reporting requirements for each state where employees are working.

Note: The IRS has determined any employee amount due that is not withheld from an employee but is paid by the employer is considered taxable income to the employee and must be included on their W-2. As an employer, the State of Oklahoma shall not pay an employee's share of required state tax or other withholdings on their behalf. All employee amounts must be withheld from the employees’ payroll.

Agencies that have received HSA refund audits from OMES HCM Employee Benefits Department should process employee refunds as soon as possible, and no later than the last paycheck of this calendar year.

• For audits refunding 2026 HSA withholdings, processing the refund in the same calendar year will prevent the agency from having to complete a W-2C. If such refunds are processed in calendar year 2027, agencies will be responsible for completing W-2Cs for those employees.
• For audits refunding prior-year HSA withholdings (2025 or earlier), agencies are responsible for completing W-2Cs for those employees after the refund has been processed. Employees should receive their copies of the W-2C, and Copy A will need to be sent to OMES HCM Central Payroll. 
• Please contact Jean Hayes with any questions:
  • 405-522-6300
  • jean.hayes@omes.ok.gov or payrollreporting@omes.ok.gov        

In planning your work for November, Veterans Day will be observed on Wednesday, Nov. 11. The Thanksgiving holiday is recognized on Thursday, Nov. 26, and Friday, Nov. 27.

November biweekly payrolls for state agencies will be paid on Friday, Nov. 13, and Wednesday, Nov. 25.

November monthly payrolls will be paid on the last working day of the month, Monday, Nov. 30.

With these dates in mind, agency staff should plan their work accordingly:

• Supplemental: Workday supplemental payrolls are set to pay on Thursday, Nov. 12. Agencies must have the payrolls processed and paperwork forwarded to OMES by Wednesday, Nov. 4.
• Biweekly: Biweekly payroll is set to pay on Friday, Nov. 13. The next biweekly pay date will be Wednesday, Nov. 25. Agencies must have the payroll processed and paperwork forwarded to OMES by noon on Wednesday, Nov. 18.
• Monthly/legislative monthly: Monthly payrolls will be set to pay on Monday, Nov. 30. Agencies must have these payrolls processed and paperwork forwarded to OMES by Thursday, Nov. 19.

Gifts to employees are restricted and should only be given as part of a formal employee recognition program. Refer to 74 O.S. §§ 4121 and 4122. Furthermore, any gift cards, certificates or coupons given to employees are to be included in the employee’s taxable income. The Internal Revenue Service considers these items cash or cash equivalent; they do not meet the requirements to be excludable as a de minimis fringe benefit.

Even when an employer provides gift cards, certificates or coupons to purchase a turkey, ham or other nominal value property, these are considered wages and are subject to income and employment taxes. This is true even when the card restricts the items purchased, the time to use the coupon, and also when any unused portion is forfeited. Cash equivalents do not meet the de minimis fringe benefit requirements.

Agencies needing assistance with processing noncash taxable fringe benefits in Workday@OK, please submit a Service Request.

The OMES Form PWC should only be used when an employee is not entitled, in part or whole, to the funds. All PWC forms OMES Central Payroll receives will initiate the process to retrieve the funds, if direct deposit, and cancel the warrant in the payroll system. It is imperative that agencies identify payroll errors and process the forms immediately upon discovery.

Paper warrant cancellations:
Email Form PWC to payrolltransprocess@omes.ok.gov. Scan the original warrant (marked “Void”) and attach scanned file to the email. Follow up by physically sending the original paper warrant (marked “Void”) attached to the completed Form PWC to OMES HCM Central Payroll, Will Rogers Building, 2401 N. Lincoln Blvd., Ste. 302-3. These requests cannot be processed by fax.

Direct deposit cancellations:
Email Form PWC to payrollreporting@omes.ok.gov. The document must be password-protected, and the password should be included in a separate email or sent via another secure method. To ensure direct deposit funds are returned, the PWC request must be received by noon three business days prior to the effective pay date. Any request for cancellation of direct deposits after that cutoff will be subject to standard recall or reversal procedures which the employee’s bank may deny. An employee must be notified in writing of a reversing entry and its reason no later than the effective date of the entry. Please notify the employee no later than the day the OMES Form PWC is submitted for processing.

Agency can modify the statement below and use it to inform employee(s) of the pending reversal:

“A payroll item posting on MM/DD/YY was deposited in error to your bank account. A reversal has been issued to remove these funds from your account and return them back to the state. Please keep the full amount of this deposit in your account. If the state cannot retrieve the full amount of the deposit, action will be taken in accordance with applicable procedures to retrieve the funds directly from you.”

Once the funds have been returned to the state, OMES will process a cancellation in the payroll system to return the funds to the agency. If the funds cannot be recovered from the bank, the agency is responsible for recovering the funds from the employee. Please refer to 74 O.S. § 840-2.19 D for proper procedures for recovering overpayments, if needed. The agency should submit OMES Form 94P for processing if the employee reimburses the funds through a miscellaneous payroll deduction or cash.

PWC forms received for direct deposit items that are more than four business days past the effective date will not be processed pursuant to NACHA rules. If agencies encounter erroneous entries more than four business days past the effective date, please contact OMES Central Payroll or the Office of the State Treasurer (OST) for consultation on options for recovering the funds.

Agencies need to review all outstanding employee overpayments and collect required amounts from employees. After collection, please submit OMES Form 94P, as applicable. If a refund of taxes is due to the agency, the form must be submitted by Friday, Dec. 11, 2026. After this date, refunds cannot be returned to the agencies; however, agencies are still required to submit the form after this date for employee wage corrections. Corrections due to overpayments will be posted to the employees’ 2026 W-2 for requests submitted through Monday, Jan. 4, 2027. Any corrections submitted after Jan. 4 will require a corrected W-2.

When an employee reimburses a payroll overpayment, please complete and submit the OMES Form 94P as soon possible after the reimbursement is made. Timely submission helps ensure corrections are reflected in the quarter in which they occurred for proper reporting and helps ensure the full recovery of OPERS retirement amounts. If the retirement system is not aware of an overpayment and the pending overpayment refund request, payouts to former employees may be incorrect, resulting in a loss to the agency. In addition, retirement calculations may be incorrect if the overpayment is not reported timely.

Please do not provide copies of personal checks or copies of the payslip. The form allows the agency to enter the amount reimbursed. Additional backup data is not required. For the privacy and security of the employee, the form requires the state employee ID (EmplID) be entered; do not submit with the Social Security number or any other number.

Employee overpayments collected in the next calendar year are to be repaid at the gross overpayment amount in accordance with IRS regulations. If an employee owes the agency, notify the employee that if the amount is not paid in full by Dec. 31, 2026, the amount due will increase to the gross amount.

In accordance with 74 O.S. § 840-2.19, the agency must send a notice to the employee within 10 days of identifying an overpayment. The employee then has 30 days to respond to this notification. Employees have several options for repaying overpaid payroll amounts:

• Reduction of annual leave (for the gross overpaid).
• Reduction of current gross salary (for the gross overpaid) in a lump sum or installments over a term not to exceed the term in which the overpayment(s) occurred.
• Lump-sum cash repayment.
• Miscellaneous payroll deduction (for the net overpaid) in a lump sum or installments over a term not to exceed the term in which the overpayment(s) occurred.
• Any combination of the above options.

With the calendar year end nearing, the collection of any outstanding overpayment is especially important and must be conveyed to employees who owe any monies back to the agency. When an overpayment is reimbursed in a subsequent year, IRS rules state the employee must reimburse at the gross amount because the funds were available for use in the prior year and, as such, they are taxable to that year. Additionally, federal and state wages and taxes cannot be reduced for prior years when repayments are made after the end of that calendar year.

For example, John Doe was overpaid in August by $1,000 regular wages. This was discovered in September, and the agency calculated what the correct payroll should have been. The net check difference is $743.50, the amount the employee owes the agency if making the reimbursement by personal check or miscellaneous deduction in the current year. If the employee does not reimburse the net amount by Dec. 31, 2026, the employee owes the agency the full $1,000 gross overpayment.

If the employee reimburses the entire gross amount after year end, the applicable W-2, corrected W-2 or W-2C will only reflect a change in the Social Security and Medicare wages and taxes. Since the employee received and had use of the funds during the year of overpayment, the amount is still taxable for federal and state purposes. The W-2 form will not correct federal or state taxable wages or income taxes. The employee may be entitled to either a deduction or credit on their current year Form 1040 and should be advised to speak to their tax accountant.

When an employee chooses to reimburse an overpayment of salary or wages with annual leave, the amount of annual leave reduced should equal the gross amount of the overpayment.

If an employee reimburses an overpayment with terminal leave, an OMES Form 94P must be submitted to correct the retirement amounts reported on the check which included the overpayment. Terminal leave is not included in retirement wage calculations; therefore, a payroll correction is required. For assistance, contact Jean Hayes at 405-522-6300 or email Payroll Reporting.

State agencies must complete Form DER, Deceased Employee Reporting, when an employee has passed away and payments are made after the date of death. Complete all forms and send to OMES Central Payroll as soon as possible after all payments have been processed. Submission of all relevant forms will ensure year-end reporting is correct.

Amounts paid in the year of death are reported on the W-2 for Social Security and Medicare only. The amount that would have been reported as federal and state wages is required to be reported on a 1099-MISC to the individual(s) who received the payment(s). Payments made in the year after the date of death are not subject to Social Security and Medicare and are not reported on the W-2. The amount that would have been reported as federal and state wages is reportable on a 1099-MISC to the individual(s) who received the payment(s).

The Workday@OK Deceased Payroll Process guide will assist you in processing payments after the date of death.

NOTES:

• Remember to record the term reason as death: Terminate Employee > Involuntary > Death.
• Due to the timing of the deposit and date of death, banks may return direct deposits for deceased customers. The return of an item will cause a delay to the beneficiary.
• To assist recipients in tax planning, notify them that they will be issued a 1099-MISC form at year end, and that the amounts will be reported to the IRS and state.

40 O.S. § 165.3a allows employers to provide employees the option of designating a beneficiary for wages and benefits payable upon an employee’s death. The State of Oklahoma, as an employer, offers this to all state employees. Providing this option to employees relieves stress and anxiety for family members and provides agencies with clear guidance on who should receive final wage payments.

This statute does not include any longevity payment that may be due as of the date of death of an employee. 74 O.S. § 840-2.18, subsection H.2, authorizes any longevity payment to be paid to the decedent’s surviving spouse, or if there is no surviving spouse, to the decedent’s estate.

Employees can complete the designation process in Workday@OK by following these steps:

1. Open the Menu and navigate to Organization > Requests.
2. Select Create Request.
3. In the pop-up window, use the Request Type drop-down menu to select All.
4. Choose Outstanding Wage Beneficiary Designation Form and select OK.
5. Complete, sign and submit the form.

Agency report

Agency HR and Payroll staff can run RPT00581 - Worker Outstanding Wage Beneficiary Forms to audit outstanding wage beneficiary forms in the system. Employees can submit forms through onboarding or the request process and may appear on the report under both categories. Please ensure you are using the most recent form based on the signature date.

The HCM system correctly calculates taxes based on the current tax rates and an employee’s withholding certificates. Agencies should not override the taxes calculated. If the taxes appear to be incorrect, the employee's paycheck should be reviewed before continuing the payroll process. If the taxes prevent after-tax deductions from being withheld, the employee should be notified. Payment of items not withheld through payroll due to lack of net pay must be settled between the employee and the entity.